Why the Web Matters in the Viacom/Time Warner Fight
by Peter Kafka
Posted on December 31, 2008 at 8:49 AM PT
The Viacom/Time Warner Cable faceoff–Viacom is threatening to yank its channels (Comedy Central, Nickelodeon, MTV, etc.) off the screens of the cable company’s 13.3 million subscribers at midnight tonight–is nothing new. A cable network wants more money, a cable operator doesn’t want to pay up. Happens periodically.
The new twist here is what broadband video adds to the equation: It’s both a plus for Viacom (VIA), and a source of irritation for Time Warner Cable (TWC).
- The upside for Viacom: Additional leverage as it negotiates with Time Warner. If you can’t get “The Daily Show” on your TV in January, you can watch it all over the Web: At its own site, at Fox and NBC’s Hulu, and on Comcast’s (CMCSA) Fancast.
- But that same promiscuity with content is one of the things that’s now stuck in the craw of Time Warner: It figures it is paying Viacom a per subscriber fee because those subscribers can only get Viacom’s stuff on cable. If they can get it anywhere, the argument goes, it’s less valuable.
I don’t want to overstate the importance of the Web here: Cable subscription revenues are going to be much, much bigger than Web dollars for Viacom and other content providers for a very long time. And there’s no reason to think this won’t get resolved in the way that all these fights get settled: Time Warner pays more than it wants, Viacom accepts less than it was looking for.
But do look for the cable guys to wring some additional online concessions out of the networks in the years to come: Either the ability to distribute the shows online themselves (hence, Fancast), or a piece of online revenues, in some form or another.
Meanwhile, here’s Viacom’s 30-second ad, which you can now find on YouTube, of course:
And here’s a highlight from the last broadcast of “The Daily Show”: Hall and Oates playing tribute to former News Corp. employee Alan Colmes:
Comments
Couldn’t you look at this the opposite way and say that the web advantages TWC?
Viacom’s strategy seems predicated on TWC customers freaking out and demanding that the operator cave.
But if those customers have access to their favorite Viacom shows via the web, will they actually get as bent out of shape?
Posted by Joseph Weisenthal at December 31st, 2008 at 1:25 pmHi — I’m the director of digital communications at Time Warner Cable.
Take a look at the popup that’s showing up on websites owned by Viacom — any of ‘em, MTV.com, VH1.com, etc. The text says, in part “Attention Time Warner Cable and Bright House Networks customers, starting tonight, you will lose your favorite MTV shows on TV and online because of a dispute with Time Warner Cable and Bright House Networks.”
Here’s a screen shot: http://twitpic.com/ycvx
It’s that phrase “and online” that’s really troubling. What does Viacom mean by that? If the statement’s true and not just a scare tactic, then it either means:
1) They’re going to take all their video content off the Web and ruin it for everybody.
2) They’re somehow going to block Time Warner Cable / Bright House/ Roadrunner subscribers only from seeing their free video content, probably by blocking a range of IP addresses.
If they do the latter, they will be blocking our Road Runner customers – many of whom don’t even subscribe to our video service – from the same full Web experience that they provide everyone else for free.
What will that do for the future of online video? We’re not sure, but one thing’s positive: it won’t be good.
Posted by Jeff Simmermon at December 31st, 2008 at 2:43 pmTWX is in fact trying to spin it that way by encouraging people to go see the shows online. But again, for a very long time to come, this is all about cable subscribers and the dollars they provide. TWC can’t risk a subscriber leaving for, say, Verizon’s FiOS. Anymore than Verizon can risk losing them.
Posted by Peter Kafka at December 31st, 2008 at 2:45 pm